Fundamental of International Buisness
FUNDAMENTALS OF INTERNATIONAL BUSINESS: INDONESIAThe Republic of Indonesia is an archipelago located between the Indian Ocean and the Pacific Ocean, providing a convenient gateway between Asian countries and Australia. The main language is Bahasa Indonesia but English as a second language is widely used. Its currency is called Indonesian Rupiah which is equivalent to approximately 10,000 rupiah to 1US Dollar.
Being one of our company’s investment target, relevant data have been included for future reference and perusal. President Susilo Bambang Yudhoyono is taking drastic measures to stop the country’s economic downhill trend which includes the strengthening of its trade policies. Investors are gaining confidence despite natural disasters and bombings due to the opportunities presented in the economic reforms. The Indonesian Rupiah is gaining strength against the dollars although its stability cannot really be gauged as of the present. With the country’s membership to global organizations such as APEC, GATT/WTO and the ASEAN Free Trade Agreement (AFTA), several trade barrier laws have been eliminated and import tariff has been considerably reduced. Even the processing of licensing requirements has been made easier and faster as they move towards the creation of investor-friendly environment. Several major sea and air ports have been opened and free trading zones have been established. Since government is extending its full support to its Foreign Direct Investment (FDI) arm, investors can expect a more relaxed and positive atmosphere as they put up businesses in Indonesia. Bureaucratic red tape is still existent, though, so this is one of the things that we will have to deal with as it can definitely affect our time plan and even our budget.
The country’s location is ideal for trading because it is between Asia and Australia. There lies a big potential for marketing our product especially to countries such as China, Philippines, Malaysia, and of course, Australia. The cost of transporting materials and finished goods is rather cheap because of the rupiah’s standing against the US Dollar. The availability of skilled factory workers and managers will not be a problem since Indonesia’s population is next to China and India and they are mostly working age. The minimum wage for workers is also low which will considerably lower our production cost because of cheap labor. However, the raw materials that we will need for our detergent plant specifically sodium chloride (salt), phosphate and chlorine might have to be imported from other countries.
Major trading countries in Indonesia include the U.S., Japan, Singapore, and India and according to Business-in-Asia.com, major industries revolve around oil, gas, textiles, timber, coffee, rubber, coal, tin, copper, rice, pepper, and palm oil, which means that putting up a detergent plant will not face stiff competition from international companies. Competition from local manufacturers should be given more attention though because Indonesian consumers consider the price more than the quality of goods (Buyusa.gov).
With all these information, it is safe to assume that our company’s interest in putting up a detergent plant in Indonesia is a viable future investment. With the country’s direction towards a more open trading partnership to other countries, the availability and low cost manpower, and the limited competition in the field that we want to pursue, Indonesia could be the next big thing for our company.
Country Profile Indonesia. Retrieved December 15, 2005, from http://www.aseanindia .net/asean/countryprofiles/indonesia/bilateraltrade.htm
Indonesia Country Gateway. Copyright 2002. Retrieved December 15, 2005, from
BPS Statistics Indonesia. Retrieved December 15, 2005, from http://www.bps.go.id/ sector/ftrade/
U.S. Commercial Service. (2001). BUYUSA.GOV. Retrieved December 15, 2005, from
Runckel & Associates, Inc. (2004). Business-in-Asia.com. INDONESIA. Retrieved
December 15, 2005, from http://www.business-in-asia.com/indonesia1.html